FAQ Proposals

If you live in the (519) area code call 310John and we can help you sort through your debt issues.

What does it cost to file a proposal?
The fees we are allowed to charge to do a consumer proposal are set by tariff under the Bankruptcy and Insolvency Act. The tariff fees say that we can charge as follows:

$750 to prepare the proposal, the sworn statement of affairs and related documents, notifying the creditors and negotiating with the creditors;

$750 upon the proposal being approved by the court or deem approved by the court (this does not mean that a person making a proposal has to go to Court); and

20% of what is distributed to the creditors.

Important - It is a Win Win: However, it is important not to misinterpret the above information. We generally structure a proposal is such a way that we ask for the first payment under the proposal which covers off our out of pocket expenses and maybe some small amount towards our fees. Then if we are successful at negotiating a proposal the person makes the payments as agreed in the proposal and we receive the rest of our fees from future payments. For example:

If a person is making a proposal of $300 per month, we would ask for the first $300 up front (we pay the government filing fee of $100, the software fee of $17 plus the costs for various lien searches, postage, etc). Then once the proposal is accepted by creditors and deemed approved by the Court, the person makes their monthly payments and once enough money is accumulated in our trust account, we would take the fee we are entitled to under the tariff and send creditors their portion. So, under this scenario, if we were not successful at negotiating a proposal for you, we really don't earn much if anything. So, it is a win win. If we are successful at helping you get an approved proposal, we make money. If not, then we don’t stand to profit from you. Why do we do it this way? It is simple, if we don't think your proposal will work, we will tell you up front. We are serious about helping people find real solutions that work.

The cost to file a Division I proposal is based on an hourly rate plus out-of-pocket disbursements and will very depending on the complexity of the situation. It is impossible to attempt to suggest what fees might be before assessing the situation, especially given that Division I proposals are usually far more complex than Consumer Proposals.

Are proposals better than bankruptcy?
Generally, both a proposal and a bankruptcy will appear as a filing under the Bankruptcy and Insolvency Act. On an R1 to R9 rating scale, the credit reporting agencies will generally indicate an R7 rating for a proposal and an R9 rating for a bankruptcy. The rating will stay on record for 3 years after a proposal has been completed and for 6 years after a discharge from bankruptcy

Can I pay off my proposal early?
A proposal plan will vary from situation to situation and is open to anything that is reasonable for you and your creditors. This can range from making monthly payments; selling assets to pay lump sums or having third parties pay in lump sums. At any time after the creditors/court has approved the plan, the amount offered in a proposal can be paid. In a plan offering monthly payments over several years, paying it off early will decrease the time that it appears on your credit report.

What happens to my proposal if my income changes?
Once your payment plan has been approved by the creditors/court, it will not vary if your income increases or decreases.

Can I sell my house?
Your assets do not vest in the Trustee like they do in a bankruptcy. Therefore, you may continue to deal with your property as you would normally. You may sell your house and financing a new house purchase will be at the discretion of your lender.

Can I include Canada Revenue Agency?
In most situations, Canada Revenue Agency ("CRA") is considered an unsecured creditor. In situations where you may be operating a business, there are some CRA debts that must be dealt with differently. You should discuss your situation with the Trustee who will explain in detail any of these unique CRA debts.

Can I include any of my business debts?
In certain situations, a person may have debts that are commercial in nature, and these debts may be included in your proposal. You should discuss your business detail with the Trustee who can provide you with specifics as they relate to your unique situation.

Will my name be in the paper?
There is no requirement under the Bankruptcy & Insolvency Act to put your name in the newspaper if you file a consumer proposal.

Should I open a new bank account?
In most cases, the Trustee will advise you to open a new bank account at an institution that you do not owe money to.